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October 8, 2021

OGUK warns North Sea supplies need to be maintained

The UK trade body’s warnings follow the global gas shortage that sent prices surging in the past weeks.

By Sam Tabahriti

Without new investment and proper maintaining of the North Sea supplies, UK gas production will fall 75% by 2030, according to Oil and Gas UK (OGUK).

OGUK’s energy transition outlook, to be published later this month, will warn that such reliance will increase, unless the UK invests in the new resources known to lie under its continental shelf.

It insisted that, without such investment, the UK gas output will plummet another 75% by 2030.

It comes as wholesale gas prices rose 37% in a day, hitting £4 per therm in short-term global markets. OGUK added that this was a 700% increase compared with more typical levels at the start of 2021.

The factors causing the last surge include Russia making a 70% reduction in the amount of gas delivered to the EU and the surging global demand for liquified natural gas shipments, especially from Asia.

The industry body said that the UK’s own gas fields in the North Sea and Irish sea have served the nation well “but their output is falling, partly because too few new fields have been developed. From self-sufficiency in 2004, the UK can now meet only half its own gas needs”.

OGUK highlighted that the nation consumed 74 billion cubic metres of gas in 2020, which equates to 1,100 cubic metres per person. With the UK relying on imports, half of that had to be imported from other countries including Norway, Qatar, Russia, Trinidad and Tobago, Egypt, and Nigeria.

Deirdre Michie, chief executive of OGUK, said: “The gas resources off our own shores can boost our energy security and protect jobs. The UK industry’s own greenhouse gas emissions, generated during production from these new fields, would also be a lot lower than those generated by liquefied natural gas imports.

“The UK and our industry are on a journey to achieve net-zero emissions by 2050. We fully support this goal, but 23 million UK homes are still heated by gas, which also generates 40% of our electricity, so we will need gas to power us through this green transition. It would be far better to get as much of that gas as possible from sources we can control, rather than rely on other countries.”

In a statement posted on its website last week, OGUK stated that global demand for gas will rise for the next two decades. It added that the UK’s North Sea resources can buffer consumers against future shortages, provided energy firms are able to bring them into production.

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